Time to Dump American Century?

By Sun

I have been investing with American Century Equity Income Fund (TWEIX) for quite some time. First I had it in my taxable account, then added to my wife’s Roth IRA. But now it seems the time will soon come to dump it completely.

Morningstar reported that the fund company is planning to shake up its fund lineup and place many funds into the load fund category. The reason for the move is “to replace a complicated and confusing share class structure with a straightforward one that individuals and advisors can better understand.” Yeah, I can better understand the fee now.

The changes, should they be approved by fund shareholders, will result in an increase in the load fund lineup from 26 funds to 39 total, including some prominent options. For instance, in the large-cap space, American Century Equity Income (TWEIX), American Century Equity Growth (BEQGX), and American Century Ultra (TWCUX), some of the firm’s better-known funds, will all transition from the no-load Investor share classes to the load lineup, and will be primarily targeted toward fee-based advisors and retirement plans.

Several bond funds currently have no-load will also be affected by the change, including American Century Inflation-Protection Bond (APOIX), American Century High-Yield Bond (ABHIX), and American Century Long-Term Tax Free (ACLVX).

I don’t invest in load funds and can’t find any justification of continuing to own TWEIX once it becomes a load fund. I will vote against the change when I receive the proxy vote, but the change will probably happen anyway. So it’s time to cut it and move on.

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